The Enforcement Directorate found circular trading of at
least Rs 4000 crore in Chandrakant Patel's book of accounts, the mastermind of Rs 84 crore cash-to-gold case.

The 'cash-to-gold' case is getting bigger day by day. The Enforcement Directorate (ED) has found the circular trading of at least Rs 4000 crore in the book of accounts of Chandrakant Patel, who is the main accused and mastermind of Rs 84 crore cash-to-gold case.

What is circular trading?

Circular trading is a fraudulent trading scheme where sell orders are entered by a broker/trader who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.

An initial report of the forensic investigation conducted by the ED indicates that in last five fiscal years, suspicious turnover of Rs 4000-4500 crore were shown i.e. Rs 800-900 crore per annum. "Out of which almost 80 per cent of turnover was moving between three companies itself i.e. Pushpak Bullion, Pihu Gold and Satnam Jewels.

Last month, Patel was arrested under Section 19 of the Prevention of Money Laundering Act (PMLA) for money laundering in the post-demonetisation period. As per case details, during November-December 2016, huge cash deposits amounting to Rs 84.5 crore were deposited in two shell companies i.e. Pihu and Satnam.

Later, the funds were transferred in the account of Pushpak Bullion in order to purchase 258 kilogram of gold, which were subsequently given back to both companies to sell it in the bullion market. "The case pertains to Rs 84 crore of money laundering during demonetisation period. But, the investigation done by our team revealed that Patel's annual turnover was showing Rs 800-900 crore i.e. transaction of almost 3000 kg gold (Rs 30 lakh per kg) every year. The agency is looking into the money trail of Rs 84 crore, plus probing deep into the suspicious circular trading conducted by Patel, all these years", a source told IndiaToday.in.

The agency said that demonetised old currency notes were wrongly and malafidely laundered in the form of gold and the bank i.e. Union Bank of India was cheated in the planned manner.

Further investigation revealed that Patel had used bogus entities like Akash Enterprises and Skyworth Tradelink Pvt Ltd to project as genuine money to the Bank, in which Patel is already a defaulter of Rs 114 crore. Sources within the bullion market told IndiaToday.in that Patel was doing well in his business, till 2014.

But in last few years, something went wrong and Patel decided not to return an amount of Rs 1200 crore to various parties, out of which few are industry's big players. "Large part of this money was black, therefore, nobody dared to complain it to any authority", the source said.

Giving a political colour to this money laundering case, earlier Congress leader Sanjay Nirupam made an allegation that Shivsena leader and State Minister Ravindra Waikar was having business links with Patel. Now, BJP's Member of Parliament (MP) Kirit Somaiya alleged that there "is a hawala transaction between Patel and Shivsena leader/MNS corporators."

Somiaya alleged, "It is understood that ED have detected similar transactions mentioned above and transactions, business activities, financial transactions, between Shivsena, Shivsena leaders and Patel".

However, the reality is something else. Till now, despite various speculations and information floating around, the investigative agency has not found any linkages or money trail that proves that Patel was having any political-business deals with Shivsena or any other political parties.